U.S. auditor overseer vows to keep rigorous audit monitoring

The Public Company Accounting Oversight Board, a U.S. auditor overseer, said it will continue to enforce a rigorous monitoring system over audit firms to see whether they are doing their jobs effectively as part of efforts to boost investor protection.

Its major responsibility includes imposing disciplinary measures and penalties and issuing alerts if the agency finds a trend of possible malpractice among auditing firms or any companies listed or seeking fund-raising in the U.S. capital market.

PCAOB member Lewis H. Ferguson told The Korea Herald on Sunday that its countermeasures have gone up a “notch” since its establishment.

He added that this is necessary to build a strong regulatory regime which global investors can trust following the Enron scandal in the early 2000 and the financial crisis of 2008.

Ferguson, who is also vice chairman of the International Forum of Independent Audit Regulators, is in Busan for the forum to be hosted by Korea’s Financial Supervisory Service over the next three days.

With the financial markets being closely integrated globally, PCAOB plans to boost exchanges with regulators worldwide in effective monitoring techniques and information to prevent illegal acts that could hurt investors.

Ferguson said, for example, it had barred small audit firms from practicing, and issued alerts against some Chinese companies that sought fund-raising in the U.S. capital market as the agency found them fraudulent.

He said that the quality of auditing has gotten better as there were not any irregularities in financial and audit reports during the global financial crisis, although many failed to anticipate the downturn.

PCAOB was founded by the U.S. Congress after major auditing scandals from Enron, WorldCom and their auditor, Arthur Andersen. There are 12 Korean accounting firms registered with the U.S. agency, including Deloitte Anjin, BDO Daejoo and Daemyung Grant Thornton.

By Park Hyong-ki (hkp@heraldcorp.com)